For 2012, Avatar Industries Inc. initiated a sales promotion campaign that included the expenditure of an additional $35,000 for advertising. At the end of the year, Leif Grando, the president, is presented with the following condensed comparative income statement:

Instructions
1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.
2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in(1).

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Avatar Industries Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2011 2012 $630,000 30,000 2011 Sales $504,000 24,000 600,000 480,000 259,200 $270,000 $220,800 $144,000 86,400 62,400 $148,800 54,000 72,000 19,200 ...$ 78,000 91,200 38,400 52,800 330,000 Cost of goods sold.. . Gross profit . Adminstrative expenses .._. 72,000 Other income Income before income tax Income tax expense (benefit). . .. Net income (loss) $216,000 24,000 48,000 ... . 30,000